TY  - JOUR
AU  - Cagetti,Marco
AU  - Nardi,Mariacristina De
TI  - Estate Taxation, Entrepreneurship, and Wealth
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13160
PY  - 2007
Y2  - June 2007
UR  - http://www.nber.org/papers/w13160
L1  - http://www.nber.org/papers/w13160.pdf
N1  - Author contact info:
Marco Cagetti
Board of Governors of the Federal Reserve System
Flow of Funds, Mail Stop 97
Washington, DC 20551
Tel: 202-452-2685
E-Mail: Marco.Cagetti@frb.gov

Mariacristina De Nardi
Federal Reserve Bank of Chicago
230 South LaSalle St.
Chicago, IL 60604
Tel: 312/322-5769
Fax: 312/322-2357
E-Mail: denardim@nber.org
AB  - We study the effects of abolishing estate taxation in a quantitative and realistic framework that includes the key features that policy makers are worried about: business investment, borrowing constraints, estate transmission, and wealth inequality. We use our model to estimate effective estate taxation. We consider various tax instruments to reestablish fiscal balance when abolishing estate taxation. We find that abolishing estate taxation would not generate large increases in inequality, and would, in some cases, generate increases in aggregate output and capital accumulation. If, however, the resulting revenue shortfall were financed through increased income or consumption taxation, the immensely rich, and the old among those in particular, would experience a welfare gain, at the cost of welfare losses for the vast majority of the population.
ER  -